Stock Options Watch: GDX, PCRX, ARUN

By May 7, 2013, 1:24 PM Author's Blog  

GDX – Market Vectors Gold Miners Index ETF – Big prints in GDX put options on Tuesday morning indicate some traders are positioning for shares in the Market Vectors Gold Miners Index ETF to potentially drop to the lowest level since December of 2008. Shares in the ETF are off 3.0% today at $28.85 as of midday in New York. Volume in GDX options is heaviest in the Jun $27 strike puts where nearly 40,000 puts have traded versus open interest of 16,819 contracts. It looks like the bulk of the volume was purchased for an average premium of $0.89 per contract. Put buyers stand ready to profit at June expiration should the price of the underlying plunge 9.5% from the current level to trade below the average breakeven price of $26.11 by expiration. Sizable prints in the Jun $27 puts helped push the put/call ratio on GDX above 4.4 during the first half of the session.

PCRX – Pacira Pharmaceuticals, Inc. – Shares in specialty pharmaceutical company, Pacira Pharmaceuticals, Inc., are bouncing around on Tuesday, rising as much as 2.0% in the early going, before reversing gains to trade down 2.0% at $27.84 by 12:25 p.m. ET. The company reports first-quarter earnings ahead of the opening bell tomorrow. Options changing hands on Pacira this morning suggest one trader is positioning for PCRX shares to approach record highs in the near term. It looks like more than 1,000 of the May $30 strike calls were purchased for an average premium of $0.90 each. The bullish strategy makes money if shares in the pharmaceutical company rally 11% over the current price of $27.84 to top the average breakeven price of $30.90 by expiration next week. Shares in PCRX are up more than 180% since this time last year.

ARUN – Aruba Networks, Inc. – The provider of network access solutions for mobile enterprise networks released preliminary third-quarter earnings and revenue numbers that missed analyst expectations, sending shares in Aruba Networks down 22% to $17.12 today, the lowest level since August of 2012. June expiry put options trading on Aruba this morning indicate some traders are bracing for the stock to extend losses in the near term. The June $18 strike puts attracted substantial volume, with around 1,500 in the money puts changing hands versus open interest of just 30 contracts. It looks like most of the volume was purchased during morning trading for an average premium of $1.51 each. Put buyers stand ready to profit at June expiration should shares in ARUN decline another 3.7% to breach the average breakeven point on the downside at $16.49.

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